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The Two-Way

Philip Morris Threatens To Sue Australia Over Cigarette Packaging Law

By Eyder Peralta

Beginning in January of 2012, Australia plans to introduce plain cigarette packaging. As the New York Times reports, legislation, which is expected to pass through the Australian Parliament easily in July, would mandate that cigarettes be sold in green packets without any logos.

The move comes just a week, after the U.S. introduced nine graphic labels companies will have to place at the top of cigarette boxes. Big tobacco is not happy.

Reuters reports Philip Morris has threatened to take the Australian government to international court over the proposed changes. The company claimed that plain packaging will affect their ability to compete against other brands and that the law violates Australia's bilateral investment treaty with Hong Kong:

The notice sets a mandatory three-month period for the two sides to negotiate an outcome. If there is no agreement, Philip Morris Asia said it would seek compensation.

...

Compensation would be decided under United Nations trade rules.

"It will be up to the panel that will operate under the United Nations international trade rules to look at which evaluation method they would use determine the loss to our business," said [Philip Morris Asia spokeswoman, Anne Edwards.] "We estimate it may be in the billions (of dollars), but ultimately it will be up to this panel to decide."

The Australian Broadcasting Corporation reports Philip Morris is likely more concerned about the precendent this law sets for other countries than the small Australian market. ABC reports that the Australian government said it "can withstand an attack from big tobacco."

The network reports that Australia said international laws allow nations to act in the public interest.

"The World Health Organisation makes clear and recommends in its tobacco control convention that states should consider taking this step of introducing plain packaging for the sale of tobacco products," Australia's Health Minister Nicola Roxon told ABC.

The New York Times adds that Australia already taxes tobacco heavily. Smokers pay about $16.70 a pack. The Times reports the proposed law is also popular, with 59 percent of Australians approving.